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Is Environmentalism the Right Strategy to Decarbonize the World?

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  • Thisse, Jacques-François
  • Marini, Marco
  • Tarola, Ornella

Abstract

We study how the supply of environmentalism, which is defined by psychic benefits (costs) associated with the purchase of high-environmental (low-environmental) qualities, affects the way firms choose their products and the ensuing consequences for the global level of pollution. Contrary to general belief, a high supply of environmentalism does not give rise to a better environmental outcome because it endows firms with more market power which they use to maximize profits. By contrast, standard policy instruments such as a minimum quality standard or the use of greener technologies leads to a better ecological footprint.

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  • Thisse, Jacques-François & Marini, Marco & Tarola, Ornella, 2020. "Is Environmentalism the Right Strategy to Decarbonize the World?," CEPR Discussion Papers 15355, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15355
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    Cited by:

    1. Ambec, Stefan & De Donder, Philippe, 2022. "Environmental policy with green consumerism," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).

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    More about this item

    Keywords

    Environmentalism; Vertical product differentiation; Psychic costs and benefits; Environmental policy;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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